November 17, 2004 MIS 680 International HR


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November 17, 2004 MIS 680 International HR

  2. 2. Agenda <ul><li>Geography </li></ul><ul><li>Demographics </li></ul><ul><li>Government </li></ul><ul><li>Culture </li></ul><ul><li>Economy </li></ul><ul><li>IT Industry </li></ul><ul><li>Company Showcase </li></ul><ul><li>Issues </li></ul><ul><li>Summary </li></ul><ul><li>Vs Pakistan </li></ul><ul><li>Questions </li></ul>
  3. 3. Geography
  4. 4. Geography <ul><li>5,000 year old civilization </li></ul><ul><li>325 languages spoken – 1,652 dialects </li></ul><ul><li>18 official languages </li></ul><ul><li>29 states, 5 union territories </li></ul><ul><li>3.28 million sq. kilometers - Area </li></ul><ul><li>7,516 kilometers - Coastline </li></ul><ul><li>1,000,000,000 people in 2000 </li></ul><ul><li>Political Map of India </li></ul>
  5. 5. Geography <ul><li>2.4% of the world's land area, support over 15% of the world's population </li></ul><ul><li>Over 30% of Indians younger than 15 years </li></ul><ul><li>More than 70% live in more than 550,000 villages </li></ul><ul><li>Remainder in more than 200 towns and cities </li></ul>
  6. 6. Demographics <ul><li>Age structure </li></ul><ul><ul><ul><li>0-14 years: 32.2% </li></ul></ul></ul><ul><ul><ul><li>15-64 years: 63% </li></ul></ul></ul><ul><ul><ul><li>65 years and over: 4.8% </li></ul></ul></ul><ul><li>Religions </li></ul><ul><ul><ul><li>Hindu 80% </li></ul></ul></ul><ul><ul><ul><li>Muslim 13.4% </li></ul></ul></ul><ul><ul><ul><li>Christian 2.3% </li></ul></ul></ul><ul><ul><ul><li>Sikh 1.9% </li></ul></ul></ul><ul><ul><ul><li>Others 2.5% </li></ul></ul></ul><ul><li>Sex ratio </li></ul><ul><ul><ul><li>1.07 male(s)/female </li></ul></ul></ul>
  7. 7. Factors that Influence the IT Outsourcing Environment Level of Economic Growth Political System Culture IT Outsource Readiness IT Outsourcing Environment
  8. 8. Government <ul><li>Sovereign, Socialist, Secular, Democratic Republic </li></ul><ul><li>Form of government </li></ul><ul><ul><li>Parliamentary, based on universal adult franchise </li></ul></ul><ul><li>Legislature </li></ul><ul><ul><li>Parliament, consists of President and the two Houses, known as Rajya Sabha (Council of States) and Lok Sabha (House of the People ) </li></ul></ul><ul><li>Executive </li></ul><ul><ul><li>Consists of President, Vice-President and Council of Ministers led by the Prime Minister </li></ul></ul><ul><li>Judiciary </li></ul><ul><ul><li>Independent of executive </li></ul></ul>
  9. 9. Government <ul><li>Constitution </li></ul><ul><ul><li>Adopted on 26 November 1949 and came into force on 26 January 1950 </li></ul></ul><ul><li>Federal Government </li></ul><ul><ul><li>President is the constitutional head of Executive of the Union </li></ul></ul><ul><ul><li>Real executive power vests in a Council of Ministers with the Prime Minister as head </li></ul></ul><ul><ul><li>The Council of Ministers is collectively responsible to the Lok Sabha, the House of the People </li></ul></ul>
  10. 10. Government <ul><li>State Government </li></ul><ul><ul><ul><li>The Governor- Representative of the President, is the head of Executive </li></ul></ul></ul><ul><ul><ul><li>Real executive power rests with the Chief Minister who heads the Council of Ministers </li></ul></ul></ul><ul><ul><ul><li>The Council of Ministers of a state is collectively responsible to the elected legislative assembly of the state </li></ul></ul></ul>
  11. 11. Government Indian Parliament Official Web Site
  12. 12. Government <ul><li>Some Indian Government Websites </li></ul><ul><li>President of India </li></ul><ul><li>Prime Minister Of India </li></ul><ul><li>Ministry of Defense </li></ul><ul><li>Ministry of Environment and Forest </li></ul><ul><li>Ministry of Education </li></ul>
  13. 13. Government <ul><li>Customs Regulations are good for IT industry </li></ul><ul><li>Reduction of import duty on Computer Software from 114% to 0% including </li></ul><ul><ul><li>Data </li></ul></ul><ul><ul><li>Sound or images </li></ul></ul><ul><ul><li>Source code or object code </li></ul></ul><ul><ul><li>CD- ROMs containing educational, journals, periodicals, or newspapers </li></ul></ul>IT Policies
  14. 14. Government <ul><li>NASSCOM - National Association of Software and Service Companies -Secured tax exemption from profit on exports </li></ul><ul><li>Income Tax Policies since 1990 have encouraged exports of computer software and technical services </li></ul><ul><li>Tax deductions on IT profits let firms establish themselves </li></ul><ul><li>By 2010 the Indian Government will slowly begin to reduce the Income Tax deduction amounts </li></ul>IT Policies
  15. 15. Government <ul><li>New revenue for the Indian Government will go toward IT industry development </li></ul><ul><li>Laws and Regulations- Information Technology Act 0f 2000 </li></ul><ul><ul><li>Bill addresses jurisdiction, privacy, liability, uniform laws for electronic commerce, content regulation, and taxation. </li></ul></ul><ul><ul><li>Digital signatures are now acceptable and equal to hand signatures </li></ul></ul><ul><ul><li>Outlines penalties for IT criminal activity </li></ul></ul>IT Policies
  16. 16. Government <ul><li>National Long Term IT Policy </li></ul><ul><ul><li>Deregulation and de-licensing of import of software productivity tools </li></ul></ul><ul><ul><li>Insistence of higher quality through ISO 9000 standards or equivalent </li></ul></ul><ul><ul><li>Introduction of special incentives for increasing the language advantage for other languages such as Russian, Japanese, Chinese </li></ul></ul><ul><ul><li>Encourage mathematical talent into mathematically oriented software </li></ul></ul><ul><ul><li>Enforcement of copyright laws </li></ul></ul>IT Policies
  17. 17. Government <ul><li>National Long Term IT Policy </li></ul><ul><ul><li>Incentives for R&D </li></ul></ul><ul><ul><li>Deregulation of fiber optic linkages </li></ul></ul><ul><ul><ul><li>Example- project for a National Internet backbone supporting 10mbps or more including series of Urban data networks </li></ul></ul></ul>IT Policies
  18. 18. Government <ul><li>Software Development Parks </li></ul><ul><li>Example - TIDEL Park </li></ul><ul><li> / </li></ul>IT Policies
  19. 19. Culture History <ul><li>Indus Valley Civilization (up to 1500 BC) </li></ul><ul><li>Brahmanic Ages (1500 BC - 1000 AD) </li></ul><ul><li>Islamic period (1000 AD - 1750 AD) </li></ul><ul><li>British Rule (1750-1947) </li></ul><ul><li>The Indian Republic (1947-present) </li></ul>
  20. 20. Culture Religion
  21. 21. Culture Hindu Caste System
  22. 22. Culture Hofstede Comparison
  23. 23. Culture Business Etiquette – Appearance <ul><li>Men are generally expected to wear a suit and tie for business </li></ul><ul><li>Women should wear conservative dresses or pantsuits </li></ul><ul><li>When dressing casual, short-sleeved shirts and long pants are preferred for men; shorts are acceptable only when exercising. Women must keep their upper arms, chest, back, and legs covered at all times </li></ul>
  24. 24. Culture Business Etiquette – Behavior <ul><li>Never point your feet at a person. Feet are considered unclean. If your shoes or feet touch another person, apologize </li></ul><ul><li>Business lunches are preferred to dinners. Hindus do not eat beef and Muslims do not eat pork </li></ul><ul><li>Whistling is impolite and winking may be interpreted as either an insult or a sexual proposition </li></ul>
  25. 25. Culture Business Etiquette – Communications <ul><li>There are more than fourteen major and three hundred minor languages spoken in India. The official languages are English and Hindi. English is widely used in business, politics and education </li></ul><ul><li>The word &quot;no&quot; has harsh implications in India. Evasive refusals are more common, and are considered more polite. Never directly refuse an invitation, a vague &quot;I’ll try&quot; is an acceptable refusal </li></ul><ul><li>Titles are very important. Always use professional titles </li></ul>
  26. 26. Culture
  27. 27. Culture Education – IT rank within Asia – 1999 data
  28. 28. Culture Indian Institute Of Technology <ul><li>“ IIT has probably produced more </li></ul><ul><li>millionaires than any other undergraduate institution.” </li></ul><ul><li>“ Indians, most of whom graduated from IIT, founded about 10 percent of the start-ups in </li></ul><ul><li>Silicon Valley between 1995 and 1998.” </li></ul><ul><li> </li></ul>
  29. 29. Culture Indian Institute Of Technology
  30. 30. Economy <ul><li>GDP composition </li></ul><ul><ul><li>Agricultural 23%, Industry 28%, Services 48% </li></ul></ul>
  31. 31. Economy <ul><li>GDP ~ $3.033T USD (9% IT sector) </li></ul><ul><li>GDP Real growth rate ~ 8.3% </li></ul><ul><li>Investment ~ 23.1% of GDP </li></ul><ul><li>Poverty ~ 25% below poverty line </li></ul><ul><li>Labor force ~ 472 million (60% agricultural, 17% industry, 23% services) </li></ul><ul><li>Unemployment ~ 9.5% </li></ul><ul><li>Exports ~ $57.24B USD: </li></ul><ul><ul><li>US 20%, China 6%, UK 5.2% </li></ul></ul><ul><li>Imports $74.15B: </li></ul><ul><ul><li>US 7%, UK 5%, China 5% </li></ul></ul>
  32. 32. Economy <ul><li>After Independence </li></ul><ul><ul><li>door closed to foreign investors </li></ul></ul><ul><ul><li>Gov’t was “interventionalist”, monopolized media, aviation, banking, and telecommunications </li></ul></ul><ul><li>Gandhian self-sufficiency or &quot;swadeshi&quot; that had inspired the Independence movement </li></ul><ul><li>Policy-makers favored socialist economic planning with limited free-marketeering </li></ul>
  33. 33. Economy <ul><li>Private companies moved into agriculture, industry and the production of consumer goods </li></ul><ul><li>By 1990, Country was broke </li></ul><ul><li>Foreign exchange reserves were at an all time low. </li></ul><ul><li>The World Bank and the IMF agreed to bail out India </li></ul><ul><li>India joins Structural Adjustment Program </li></ul>
  34. 34. Economy <ul><li>In five years India became one of the world's top ten emerging markets </li></ul>
  35. 35. Economy
  36. 36. Economy
  37. 37. Economy
  38. 38. Economy <ul><li>FDI in India </li></ul><ul><ul><li>FDI conference index (AT Kearney) ranks India as third best destination for FDI (overall) behind China and USA </li></ul></ul><ul><ul><li>In 2003, India was ranked 3 rd </li></ul></ul><ul><ul><li>India displaced US as second place for FDI among manufacturing investors. </li></ul></ul><ul><ul><li>Telecom and Utility investors rank India 2 nd (up from 5 th in 2003) </li></ul></ul>
  39. 39. Economy <ul><li>FDI in India </li></ul><ul><ul><li>India (along with China) dominate the top two positions for: </li></ul></ul><ul><ul><ul><li>Most positive investor outlook </li></ul></ul></ul><ul><ul><ul><li>Likely first-time investments </li></ul></ul></ul><ul><ul><ul><li>Most preferred offshore investment locations for business processing and information technology services </li></ul></ul></ul>
  40. 40. IT - Access <ul><li>Teledensity at 6.0 </li></ul><ul><ul><li>Significantly lower than other developing countries. Mainly because of low per capita income and low level of urban population </li></ul></ul><ul><ul><li>World average at 15 </li></ul></ul><ul><ul><li>Increased from 3.6 in 2001 – to 6.0 in 2004 </li></ul></ul><ul><li>48,917,000 land lines (2003) </li></ul><ul><li>23,154,400 mobile phones (2003) </li></ul><ul><li>7.2 computers per 1,000 people </li></ul><ul><li>86,871 internet hosts </li></ul><ul><li>18,481,000 internet users </li></ul>
  41. 41. IT - Access <ul><li>Age </li></ul><ul><ul><li>68% users between the age of 15 and 30 use the internet </li></ul></ul><ul><li>Gender </li></ul><ul><ul><li>Male: 76%, Female 24% </li></ul></ul><ul><ul><ul><li>USA moved from similar profile to 49:51 ratio </li></ul></ul></ul><ul><li>Usage purpose </li></ul><ul><ul><li>Email - 90% </li></ul></ul><ul><ul><li>Information - 50% </li></ul></ul><ul><ul><li>Chat - 43% </li></ul></ul><ul><ul><li>Academic - 41% </li></ul></ul><ul><ul><li>Entertainment - 27% </li></ul></ul>
  42. 42. IT - Access <ul><li>Time Spent </li></ul><ul><ul><ul><li>< 1/2 hr 21% </li></ul></ul></ul><ul><ul><ul><li>1/2 hr - 2 hrs 64% </li></ul></ul></ul><ul><ul><ul><li>> 2 hrs 15% </li></ul></ul></ul><ul><li>Point of Access </li></ul><ul><ul><ul><li>Home 25% </li></ul></ul></ul><ul><ul><ul><li>Cyber Cafe 30% </li></ul></ul></ul><ul><ul><ul><li>Work 29% </li></ul></ul></ul><ul><ul><ul><li>Others 16% </li></ul></ul></ul>
  43. 43. IT - Infrastructure <ul><li>Telecommunications </li></ul><ul><ul><li>Grown by over 20% on a year to year basis since 1997 </li></ul></ul><ul><li>Power </li></ul><ul><ul><li>6 th largest power generator in the world </li></ul></ul><ul><ul><li>Regular, reliable un-interrupted power </li></ul></ul><ul><li>Roads </li></ul><ul><ul><li>3.3 million KM’s of road (2 nd largest in world). ½ of them paved </li></ul></ul><ul><ul><li>Roads & highways improved over last few years. Most cities linked </li></ul></ul>
  44. 44. IT – Major Locations
  45. 45. IT – Economic Growth <ul><li>Inward FDI </li></ul><ul><ul><li>US largest investor </li></ul></ul><ul><ul><ul><li>Microsoft, Oracle, Cisco, Intel, Dell </li></ul></ul></ul><ul><li>Job creation </li></ul><ul><ul><li>40% compounded annual growth rate (2 million jobs by 2008) </li></ul></ul><ul><li>Real estate demand/growth as a result of business relocations </li></ul>
  46. 46. IT – ecommerce <ul><li>Low e-commerce activity </li></ul><ul><ul><li>Low personal computer and Internet base </li></ul></ul><ul><ul><li>lack of security </li></ul></ul><ul><ul><li>high access costs </li></ul></ul><ul><ul><li>Small number of credit cards (5 million) </li></ul></ul><ul><li>Dominated by low value products </li></ul><ul><ul><li>Music, greeting cards and gifts, books and magazines, food stuffs and beverages </li></ul></ul><ul><li>E-commerce is picking up </li></ul><ul><ul><li>Increase from 4.5 billion Rs. In 2000 to an estimated 252 billion Rs. in 2005 (233 billion from B2B e-commerce) </li></ul></ul>
  47. 47. IT – Outsourcing <ul><li>Software development </li></ul><ul><ul><li>Evolution </li></ul></ul><ul><ul><ul><li>Started in 1984 </li></ul></ul></ul><ul><ul><ul><li>160 fortune 500 companies in 1998 </li></ul></ul></ul><ul><ul><ul><li>250 in 2004 </li></ul></ul></ul><ul><ul><li>Abundance of English speaking skilled IT workers at low cost </li></ul></ul><ul><ul><li>30% to 50% cost savings </li></ul></ul><ul><ul><li>Reliable communication infrastructure </li></ul></ul><ul><ul><li>Time zone advantage </li></ul></ul><ul><ul><li>Good export relationships </li></ul></ul>
  48. 48. IT – BPO <ul><li>Business process outsourcing (BPO) is the act of transferring some of an organization's repeated non-core and core business processes to an outside provider to achieve cost reductions while improving service quality </li></ul><ul><li>75% of US and European multinational companies now use outsourcing or shared services to support their financial functions </li></ul>
  49. 49. IT – BPO <ul><li>Kinds Of Service </li></ul><ul><ul><li>Customer Support Services </li></ul></ul><ul><ul><li>Technical Support Services </li></ul></ul><ul><ul><li>Telemarketing Services </li></ul></ul><ul><ul><li>Employee IT Help-desk Services </li></ul></ul><ul><ul><li>Insurance Processing </li></ul></ul><ul><ul><li>New Business / Promotion </li></ul></ul><ul><ul><li>Policy Maintenance / Management </li></ul></ul><ul><ul><li>Data Entry Services / Data Processing Services </li></ul></ul><ul><ul><li>Scanning, OCR with Editing & Indexing Services </li></ul></ul><ul><ul><li>Book Keeping and Accounting Services </li></ul></ul><ul><ul><li>Internet Search, Product Research, Market Research, Survey, Analysis. </li></ul></ul><ul><ul><ul><li>Technical support </li></ul></ul></ul><ul><ul><ul><li>Customer service </li></ul></ul></ul><ul><ul><li>54% growth from 2002 – 2003 </li></ul></ul>
  50. 50. IT – BPO <ul><li>Industry had a growth rate of 54% in 2003-04 </li></ul><ul><li>BPO COMPANY </li></ul><ul><li>Outsourced Product Development (OPD) </li></ul><ul><li>R&D, prototyping, development, testing, maintenance, support and development of next generation of the products </li></ul>
  51. 51. IT – BPO
  52. 52. IT – BPO
  53. 53. IT – Success factors <ul><li>Trade organizations </li></ul><ul><ul><li>National Association of Software and Service Companies (NASSCOM) </li></ul></ul><ul><li>Indian Diaspora </li></ul><ul><ul><li>Keep it’s edge in outsourcing due to influence of the Indian Diaspora in the UK & the US </li></ul></ul><ul><li>Quality, speed, process orientation all at an attractive price </li></ul>
  54. 54. INFOSYS <ul><li>Started in 1981 </li></ul><ul><li>Offers its service in the following areas </li></ul><ul><ul><li>Enterprise IT programs </li></ul></ul><ul><ul><li>Communications and Internet technology product development </li></ul></ul><ul><ul><li>Engineering product design and data management </li></ul></ul><ul><li>1999 the company became the first Indian company to list in NASDAQ </li></ul><ul><li>In 2004 the company crossed a billion dollar in annual revenue </li></ul><ul><li>Market cap of 16.13 billion dollars </li></ul>
  55. 55. INFOSYS
  56. 56. Hot off the Press !!! India is magic in software: Steve Ballmer
  58. 58. Issues <ul><li>Patenting Intellectual Property </li></ul><ul><li>Boredom and Health concerns of Employees </li></ul><ul><li>Dwindling Pricing </li></ul><ul><li>Growing Competition </li></ul><ul><ul><li>China factor </li></ul></ul><ul><li>Security </li></ul><ul><li>Attrition </li></ul>
  59. 59. Summary <ul><li>Why Invest in IT in India? </li></ul><ul><ul><li>Large pool of IT skilled labor </li></ul></ul><ul><ul><li>Good government polices on inward FDI </li></ul></ul><ul><ul><li>IT friendly import and export regulations </li></ul></ul><ul><ul><li>English widely spoken and understood </li></ul></ul><ul><ul><li>India enjoys the confidence of global corporations </li></ul></ul><ul><ul><li>Mature Industry </li></ul></ul><ul><ul><li>Relatively cheap labor </li></ul></ul><ul><ul><li>Of the 23 software companies in the world that have achieved the prestigious SEI-CMM Level 5, 15 of them are Indian </li></ul></ul>
  60. 60. Factors that Influence the IT Outsourcing Environment <ul><li>Economy </li></ul><ul><li>Fast Growing </li></ul><ul><li>Stable </li></ul><ul><li>FDI Friendly </li></ul>IT Outsource Readiness <ul><li>Government </li></ul><ul><li>Democracy </li></ul><ul><li>Stable </li></ul><ul><li>IT Friendly </li></ul><ul><li>Culture </li></ul><ul><li>English </li></ul><ul><li>Education </li></ul><ul><li>Resource Pool </li></ul><ul><li>Invest In </li></ul><ul><li>Offshore Development Center </li></ul><ul><li>BPO center </li></ul><ul><li>OPD center </li></ul>
  61. 61. Vs Pakistan
  62. 62. Vs Pakistan <ul><li>Geography & Demographics </li></ul><ul><ul><li>803,940 sq. km (~ 2x California) </li></ul></ul><ul><ul><li>Border w/ India – 2912 km. </li></ul></ul><ul><ul><li>Coastline 1046 km </li></ul></ul><ul><ul><li>141,553,775 people </li></ul></ul><ul><ul><li>41% under the age of 15 </li></ul></ul><ul><ul><li>Life expectancy ~ 61 years </li></ul></ul><ul><ul><li>Religion – 97% Muslim (77% Sunni) </li></ul></ul><ul><ul><li>English is official language of most government ministries. Official language is Urdu even though less than 10% of population speak it as primary language. </li></ul></ul><ul><ul><li>Literacy – 37.8% </li></ul></ul>
  63. 63. <ul><li>Economy </li></ul><ul><ul><li>GDP ~ $318B USD </li></ul></ul><ul><ul><li>GDP Real growth rate ~ 5.3% </li></ul></ul><ul><ul><li>Investment ~ 12.9% of GDP </li></ul></ul><ul><ul><li>Poverty ~ 35% below poverty line </li></ul></ul><ul><ul><li>Labor force ~ 44 million (44% agricultural, 17% industry, 39% services) </li></ul></ul><ul><ul><li>Unemployment ~ 7.7% </li></ul></ul><ul><ul><li>Exports ~ $11.7B: </li></ul></ul><ul><ul><ul><li>US 22%, UAE 9%, China 6%, UK 7%, Saudi Arabia 5% </li></ul></ul></ul><ul><ul><li>Imports $12.51B: </li></ul></ul><ul><ul><ul><li>UAE 12%, China 12%, Saudi Arabia 11%, US 7%, UK 5%, </li></ul></ul></ul><ul><ul><li>2004 FDI ($950M), 2003 FDI ($798M), 2002 ($485M) </li></ul></ul>Vs Pakistan
  64. 64. <ul><li>IT Industry and Issues </li></ul><ul><ul><li>2002 ~ Ministry of IT created </li></ul></ul><ul><ul><li>Exports $35 million worth of software a year as compared to $8 billion from India </li></ul></ul><ul><ul><li>Reasons Pakistan is not a significant player: </li></ul></ul><ul><ul><ul><li>low production of IT-trained workforce (~ 800 per year) </li></ul></ul></ul><ul><ul><ul><li>underdeveloped and fragmented IT industry </li></ul></ul></ul><ul><ul><ul><li>lack of any initiative from existing industry leaders, </li></ul></ul></ul>Vs Pakistan
  65. 65. <ul><li>IT Industry and Issues </li></ul><ul><ul><li>To compete: </li></ul></ul><ul><ul><ul><li>Educate workforce to the int’l educational standards, </li></ul></ul></ul><ul><ul><ul><li>incorporate new technologies and modern management practices into its industry, </li></ul></ul></ul><ul><ul><ul><li>focus on building an information-based economy </li></ul></ul></ul><ul><ul><li>Ex: October, 2004 ~ IT ministry approves Rs 236 million for ten IT projects for advancement of IT in private sector </li></ul></ul>Vs Pakistan
  66. 66. QUESTIONS ?